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What Is the Formula for Calculating Leverage Ratio in a Derivatives Portfolio?

Leverage Ratio = Total Notional Value of Derivatives Positions / Equity Capital in the Portfolio.
Greeks.Live14.11.25

What Is the Formula for Calculating Leverage Ratio in a Derivatives Portfolio?

A common way to calculate the leverage ratio is by dividing the Notional Value of all derivatives positions by the amount of Equity Capital in the portfolio. The formula is: Leverage Ratio = Total Notional Value / Equity Capital.

A ratio of 10:1 means the portfolio controls $10 in notional value for every $1 of equity.

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